Rox Medical CEO Rodney Brenneman says he’s never had a tougher time raising capital. But the deed is done, and Rox is ready to move forward into the promising hypertension area.
Tom Salemi: Well, Rodney Brenneman, welcome to the Podcast.
Rodney Brenneman: Thank you, Tom.
TS: It’s nice to connect with you again. You and I talked, I think it might not have been the last time, but the last significant conversation we had was probably around 2011, when I did an article about Rox Medical. And at the time, you were a COPD company with sort of a hypertension on the back burner. Now you’ve raised a $40 millions and you’ve reversed things, as many medical device companies do. Tell us a bit about what you’re focusing in now, your hypertension focus, and how do you intend to alleviate that?
RB: Sure. So yes, indeed we started looking at COPD. It’s the same treatment, the same therapy, connecting an artery and a vein with a novel coupling device. But it turns out it can be exploited to help patients with several different diseases, but most notably, as you said, COPD to start with, and then hypertension. And the path we follow is really to go where sort of the biggest need was and where the companies who are potentially the eventual home for Rox Medical seem to want to go with the product offering. So yeah, we turned into hypertension. I like the indication. It’s very clear to show benefit to patients. So our path right now, the raise that you mentioned is really to fund a major pivotal US study to get on the market in the US. We’re already CE Marked in Europe, so we have some very modest, limited commercialization going on there and a registry study, really trying to just trying to treat really good patients and preserve a great safety record, as you know is important for the FDA.
TS: Sure. Well, let’s start at the beginning. What’s the origin of Rox Medical’s technology? And just help explain it. It’s a coupler, it’s a device that couples basically the vein and the artery and helps share blood in between. What’s the source of the technology and how does it work?
RB: Sure. So the technology was first conceived at Stanford University in California. We licensed it. They have found through some experiments that if you take arterial oxygenated blood and move it over to the venous side, you can help the lungs in a patient with damaged, COPD, mostly due to smoking disease. And they also thought that while this could be interesting in other ways, and basically what they proved was that doesn’t have a harmful effect, it doesn’t drive pressure up on the right side of the heart and create other, bigger disease states that you wouldn’t want to create. It’s actually a pretty benign effect. And we know that too because it’s used for dialysis, creating fistulas for dialyzing blood and whatnot. So we know there’s a massive body of evidence saying this is a safe thing to do. Where you do it in the body is interesting and critical. And what Rox has done is created a little stent-like coupling device that joins an artery and a vein together in an extremely stable way. It doesn’t require a surgeon to sew vessels together. We do a normal femoral access procedure in the upper leg, go up just above the head of the femur, cross over, and place a little coupling device, probably best seen if you visit the website or whatever. But it basically creates a small hole or window, anastomosis between the iliac artery and the iliac vein. And that procedure is basically the same for all these indications, Tom, and it’s just been extremely well received. It’s very consistent and produces an immediate result in the hypertension patients in dropping blood pressure.
TS: Now and the website is roxmedical.com –
TS: And the company is ROX, not rocks. What is the origin of the name, anyway? Why ROX?
RB: Well, when we started in COPD, it was sort of maybe a play on re-oxygenation. So we actually sort of stylized the O to be green like oxygen and things. And we put a 2 in there, like O2. But we sort of dropped that now with the hypertension. But the other way to look at it with our stylized thing is as sort of a swoop that happens off the R and crosses through the O and into the X. And that’s kind of the crossing of vessels or whatever. So nothing too clever and sophisticated, but that’s just sort of the name that stuck in the early days.
TS: No, I see it. I’m looking at the website now, and now I get it. It tells your entire story. What was that process like? You’re focusing on 2 interesting areas: COPD and hypertension, both areas that had great promise at one point, both areas that obviously found their ways to some rocky shores. What was the process, though, like as a device company? As I said, it’s not an unusual process of shifting priority projects, but when did you decide that all right, maybe hypertension is the engine that we want to attach ourselves to? And what was that process like to do that?
RB: Yeah. Well, we had basically been working hard on the COPD indication, and as I mentioned, it was not an easy area to kind of turn attention away from. But it was an untapped area that was difficult to get large companies who would be acquirers of Rox to really get their heads around how they would take on pulmonology from a sort of interventional cardiology standpoint, and those relationships didn’t really exist and things. So it was hard to kind of get people to see that vision. And when hypertension came along and we were able to look at our own data that we already had in the smoking population and see that there was an effect there, and it was sort of intuitively obvious physiology behind this. You know, you take a pressurized arterial system and you tap off 15, 20% of the cardiac output into the venous system, which we know you can do safely, it was kind of a no brainer that you’re going to lose pressure. And we saw that in our data. And as soon as we went out and did some pilot studies, sort of proved this to our board and investors that this could work, I mean the effect was immediate, it was tangible, interventionalists knew right away that they had done something meaningful, they could document it. It was great. And it wasn’t easy, but it wasn’t as difficult as it might have been to get the company and its investors to sort of pivot into the hypertension play. And we were able to with a pretty modest amount of money – the hardest thing, honestly, Tom, was streamlining the company down. We had to go from 25 people down to 5 full time employees and another 5 or 6 consultants.
TS: I bet that was hard.
RB: And that – all credit goes to the team here that suddenly, you stripped out a lot of upper management. It was myself and a small clinical team and a person out in the field in Europe, and we were able to get it done. We brought on board Paul Sobotka, who was the Chief Medical Officer over at Ardian and was working with Medtronic and done some time even at FDA and things. And he came on board, and that was a huge add because he really knew the hypertension community, and he validated our physiology. And that’s the ability to start telling a unique story about how Rox approaches hypertension has been a huge part of the building process as well.
TS: And what was the timing? Was this done prior to Medtronic’s difficulties with the Ardian trial? Or was it after that?
RB: Before. So when everything was kind of going gangbusters and you saw everybody, all the big strategics, getting into the hypertension game was when we were making our pivot as well. And we learned off of the early HTN 1 and 2 trials as far as how they had done the protocols, what they were doing. And we looked at what they were – sort of the next level of science that went into HTN3. So we kind of knew how to model our Lancet randomized European trial. Fortunately, the way we did it and structured it gave us a very repeatable result. We picked hypertension centers of excellence, we were very careful in keeping control of the patients and how they were managed throughout, some of the things that ultimately we all know now went wrong in the HTN 3 trial for Medtronic. We were able to avoid those pitfalls in execution, most people I think would argue. So that was a lot of what we did that led to our success, I would say, was being able to conduct a pretty clean trial.
TS: How do you – it’s unfair, and as a member of the media I’ll take responsibility. But I think investors in strategics sort of do this too, in that an entire sector can be painted negatively by significantly disappointing news like the Ardian trial. How do you combat that as a CEO? I mean it’s not really fair. If there’s a trial where there’s some difficulty, sure, that’s one device, it’s one approach.
TS: What we’re doing is something completely different, yet I have to bend over backwards to convince you that this story is different than this company that has an entirely different approach.
RB: Yeah. No, that’s absolutely right. And we sort of maybe saw from a bit of the unique perspective as it was unfolding, because we were over in Europe. We were out at clinical sites, we were battling for attention, basically, and getting patients into our study while people were running around with their hair on fire, anxious to do renal denervation. And then as things started to unravel and when it sort of collapsed, if you will, we were painted with the same brush in the sense that a lot of hypertension specialists in Europe stopped referring, and everything was pretty difficult to move ahead. However, what we had as a benefit was our procedure, our therapy is so immediate, so undeniable, I mean when you put the coupler in and it sizes the balloon as its last stage, and literally you take that balloon down, and you’re watching the arterial pressure like you have in, and in the course of 5 or 6 heartbeats, you watch the blood pressure drop by 20, 30, 40, 50 millimeters of mercury immediately. There’s sort of no denying that you’ve done something just clearly different. And even hypertension specialists come into the lab or look at the patients the next day and say, my gosh, you did something. This is massive. I’ve never seen this kind of drop in this patient. I know the meds haven’t changed, I know nothing else has gone on. And then you show them durability over time and say yeah, this is the same at a year, it’s the same at 2 years, 3 years. That helped us dig ourselves – not out of the hole, but helped us escape some of being painted with the same brush. And indeed, we were able to keep enrollment going, we were able to keep our registry going, even when a lot of the denervation companies were probably struggling with that.
TS: And I suppose the fact that the procedure is reversible too is something.
TS: You can just take it out.
RB: Exactly. But we don’t necessarily take it up, but we cover it over.
TS: You cover it over.
RB: Yeah, we put a covered endograft so a stent with a Gortex covering over it. It’s very commonly used. And that goes over on the arterial side, and you just cover it. And you can reverse it is the term for it. We don’t really find the need to do that, but occasionally you’ll find a patient that, for whatever reason, usually frankly a little bit mentally unstable, whatever, they decide they just really don’t want it anymore, and we have closed one off. And unfortunately, it is what happens, that stroke has stroke within several months. So unfortunate as that is, when you reverse it you see the blood pressure go back up. That’s sort of from a scientific standpoint the ultimate validation that the therapy was really effective.
TS: Wow. That would be painful. So just one more question about this. Over that time, was there ever a doubt that Rox was going to continue? Or were you at a point where you were able to keep your head healthily above water, and you saw land, and I’m going to keep beating this rocky shore metaphor to death, and you were able to keep moving forward? Or were there some moments where you were like, Jeez, we’re going to get swamped by this?
RB: Well, certainly I wouldn’t characterize it as we always had our head above water and felt confident. There was a battle all along the way. I think it came down to a belief, myself, the team here, our people doing the procedure, even our core physicians in Europe were doing this procedure. When you see that tangible and immediate of a result and you say, my gosh, this is real, the procedure’s repeatable – doesn’t matter if you’re doing your first case or your 21st case, it’s the same, that keeps you going. And you just know you have to keep going because this is too good to let go of. So I think it’s more of it was a drive and a passion to keep moving this forward. But it was certainly never easy, and certainly never for sure. I mean the fund raise was as difficult as fundraising gets these days, even with that great story.
TS: And I do want to get into that in a second, but were you also receiving outside affirmation? Because as a medtech CEO, I’m sure every medtech CEO kind of falls in love with their technology and maybe sees things in the data that others might not see. But it sounds as if you had a lot of outside confirmation from clinicians and otherwise who were tracking your data.
RB: Yeah. I think the clinicians certainly were giving us positive feedback on it, and that helped. I think the other things that we saw that really buoyed us as a team were as people were dissecting what went wrong with the Medtronic trial, a lot of things got uncovered, and I think it was very healthy for the space to have sort of an honest conversation about renal denervation. Neuro-hormonal approaches aren’t necessarily the answer for everybody. So let’s look at the data really carefully and figure out is there a subset of patients that maybe really renal denervation isn’t suited for. And out of those conversations in that research came so data that really helped us, which is that isolated systolic hypertension, as it’s called, is not well treated by renal denervation. There’s papers out of Felix Mefoud and Michael Bohm’s group in Germany; there have been several papers since then that said, you know what, there is a phenotype here that’s not well addressed. And that built exactly into our story that Rox is really about helping especially – it’ll help everybody, but it’s especially suited, uniquely suited for people who have stiffer vessels and who have what we call structural hypertension. So that helped us a lot. And then the Sprint trial I think also helped a lot. Are you familiar with that? It came out and basically said, Look, there’s a lot of patients that are still uncontrolled. Lower blood pressure’s better for everybody. There’s serious side effects from medications and trying to get people down to what would be the most beneficial levels is going to be very difficult, if not impossible, with medications without serious side effects. So I think that helped drive the device justification story in hypertension.
TS: Did that reduce the potential market size at all? Or is the type of patient who would benefit from that, does that still represent a large segment of the hypertension population?
RB: Oh, yeah. If you mean the Sprint trial, Sprint actually expanded it in our minds. It basically said that – remember there was this sort of attempt by the hypertension community to draw a line saying if you’re more elderly, maybe a higher blood pressure is OK for you because we don’t want to medicate you and give you fainting spells and things, and it could result in falls and injuries. So there was a guidance that was written. It really wasn’t adopted as a guidance, frankly. It couldn’t get societies to endorse it, cardiology among others didn’t endorse it, so it never became part of the hypertension guidance in the US. But it was sort of a suggestion, and Sprint came out and basically said, NO, that’s wrong. Everybody benefits at all ages down to at least 120 millimeters of mercury systolic. So there’s clear benefit, and there’s mortality benefit inside of 3 years. So that to me really – I mean there’ll be endless debate about this within the hypertension community, but that really has helped justify why you need something else beyond medications to help patients get there.
TS: So let’s go over your clinical trial portfolio. Where are you at? How many have you done in Europe? How many have you done in the US? And what is your regulatory status in Europe?
RB: Sure. So let’s say there’ve been 2 basic trials in Europe. We call them – RH is our acronym for it. So RH 01 was our pilot study that I alluded to. Before that was this little subset that was in the COPD group, but we won’t count that because it as sort of a mixed phenotype. But anyway, so RH 01 was a small pilot study. Those patients are out over 3 years now, and doing great, by the way. So durability and initial confirmation. RH 02 was our Lancet study. So that was a randomized, European study, multi-center, roughly just under 100 patients total, one to one randomized. And that data we’re still following. So those patients are now out to over 2 years. There’s a one-year update, and that’s sort of most of the cohort’s out past 2 years. There’s an update, a one-year update that we’ve just prepared the manuscript on, so that’ll get presented here soon. And then there’s a registry study we call RH 03, and that’s the ongoing early commercialization, if you will, although it’s really directed towards treating patients that are very similar to our Lancet RH02 population. And it’s the things we’ve learned to kind of be used to in this population. They’re on medications from 3 classes, including a diuretic, unless they’re truly shown to be resistant or unable to take the medications. And we like to see patients are over 140 millimeters of mercury, so they’re sort of really hypertensive. Beyond that, not a lot of extra criteria. But it’s an early commercialization step. And we are CE Marked in Europe, so we technically can sell. Germany actually has reimbursement and things. So technically it is available on the market over there. In each country we’re pursuing the appropriate pathways towards reimbursement, but we’re working with sites right now because we want to keep our loyal centers of excellence going and treating patients. So we work with them. And we frankly want to kind of control the experience. Right now it’s important to protect our safety record, so we don’t want to just wholesale launch this out there to try to drive sale numbers. We really want to protect this and not give any FDA any reason to be concerned about it.
TS: So you don’t currently have anyone in Europe who’s actively selling this, you’re just more or less maintaining existing relationships?
RB: Correct. Yeah. I mean we have our own person over in Europe, and we’re looking very carefully at a few new sites and a couple new countries that have approached us, and wanted to bring the therapy into the country. But I’d say we’re keeping a pretty small footprint in Europe, Germany being maybe the exception, given the level of reimbursement there. That’s sort of our model country, and we’ll probably end up with about 6 centers active there by year end.
TS: So what about the US? What’s going on over on this side of the Atlantic?
RB: So we have a pivotal trial approved. It’s not conditional any longer. There’s a couple aspects to it that we’re still discussing with the agency, a couple things that we want to try to shift a little in the inclusion/exclusion criteria. But it is technically a fully approved pivotal trial. The design of the trial is analogous to what you’ve seen before in something like HTN3, again in the sense of having patients that are significantly hypertensive, over 150, in our case 155 systolic office blood pressure. So they’re what’s called class 2 hypertensive. They’re on three meds of different classes, including a diuretic. Unlike HTN3, though, ours are on doses. We don’t try to prescribe some optimal dose or anything. In HTN3 there was this optimal dose that was pursued. We’re not trying to tell patients or physicians, you know, how much of a drug you should be taking, just that they’re on those prescriptions. And then we make some pretty concerted efforts to make sure patients who have been under care for some time, they’re stable on their meds, we do several different measurements at the front end to really try to preserve the scientific integrity of what we’re doing. We don’t want patients changing once the enter the trial or anything, and that’s certainly something that’s plagued in the past. So numbers of patients, it’s adaptive statistics or Bayesian type design. So that means that there’s a first analysis that you prescribe on the front end. We think that’ll be a 250 patients. It’s a one to one randomized trial, so 250 patients, and you do an analysis, and if the predictive statistics say that you’re going to be successful in meeting your endpoints, then you stop enrolling and you run the trial out. If not, for any reason, you go to the next 50 patients and you do the analysis again. That’s the way the adaptive design works. We think we’ll probably be at about 20 to 25 centers in the US. They’ll all be top tier, certified hypertension treatment centers, experienced physicians. We’re not going to have near probably the number of centers that Medtronic had eventually used in their trial, and we frankly don’t think we need to go nearly as far into the patients as they did. But we know we should have very sizeable drops in blood pressure, and be able to meet our endpoint, which is at 6 months. It’s ambulatory blood pressure at 6 months. I think that’s becoming more and more the accepted standard in the US for blood pressure monitoring. If you’re familiar with the difference, office blood pressure is sort of taken in a single setting. A patient comes in. You’ve probably heard of the white coat effect. It can happen for some patients, a bit of anxiety or whatever. So sometimes that can skew the readings. But office blood pressure has always been sort of the gold standard in the US. Ambulatory has been the gold standard in Europe, and now it’s becoming more accepted here. Ambulatory, you put a cuff on, it’s an automated little box about the size of a man’s wallet on a strap that goes on your arm. And it blows up every 30 minutes during the daytime, once every hour at night. It measures the blood pressure so you get a lot of data. It’s a bit more annoying for patients certainly, but the amount of data you get in a real life setting of your daily life is arguably more reflective of your real blood pressure than a one time in a doctor’s office visit. So that’s the endpoint. We’ll have both types of blood pressure monitoring. But ambulatory at 6 months is our endpoint for efficacy and safety at one year.
TS: And what does the timeline on that look like? When might you have – what’s your next stage or what are you hoping to achieve within a certain time?
RB: Yeah. Well, we’re doing early visits to sites now, so I anticipate our first enrollment will be early Q1 next year. So we’re sort of in the final preparations, they just like to say. We have a few things to finish ironing out with the agency, and a lot of set up things to be done, Core labs, committees, a lot of work for a small company like ours, but we’re progressing well on it. And basically the patients and the docs are kind of ready and chomping at the bit. It’s us getting everything finished off and ready to go. But Q1 we’ll start enrollment. Probably run maybe 24 months for enrollment, 18 to 24, just depends on the pace we’re able to drive.
TS: Great. And just the final topic, the fundraising. You raised $40 million. You had Apple Tree and Novartis Venture Fund come in to lead and your previous investors, Versant and Domain returned. So that’s always great when you have the existing investors returning. What was that process like? Where were you in – did you have all the trials approved when you went out fundraising? Or were there still some questions that needed to be answered when you started fundraising? And what was the process like? How long did it take?
RB: Yeah. So I’m thrilled to have Novartis and Apple Tree to join our Versant and Domain team. They’re all people that I know over the years. Be great to have board members that are so widely respected and also are our business colleagues for many years. We basically had a conditional approval from FDA at the time we were doing our fundraiser, Tom, so we weren’t final approved, but we had quite a bit of the definition around the study picked, and not surprising, a lot of discussion around that and where the risk points are, and all that. But we got final approval at the tail end when the deal was basically done, for all practical purposes. And let’s see, was there another question buried in there?
TS: It was a multi-tiered question. What was the process like?
RB: Oh, the process, yeah.
TS: Trying to forget it?
RB: I’m trying to blank that out. You know, you hear about it, and it was everything that I was warned about, which is fundraising is just very difficult these days. Venture funds, those that are left and doing investments, even late stage, are very conservative. So there were lots and lots of questions on basically every front. So this was not easy to get people who understood and believed in the space, didn’t already have another investment if that was a primitive feature for them, understood our approach, believed the hypertension space was not corrupted forever, and then could make through all the diligence. And diligence is rigorous these days, into every aspect, not just sort of IP being the tough deep dive. I mean it’s regulatory, it’s reimbursement, it’s the clinical realm, it’s physiology, it’s doctors looking at it. You name it. Every aspect. Quality, quality systems, everything is looked at. And many of these groups, or some of the groups who have large teams these days, employ a team of diligence folks, and they’re trying to be really careful, I think. But as a result, as a small company, you’re really hopping, and you’re using all your resources to try to keep up with not just setting up a data room. I mean you’re getting live requests for data cuts and access to your experts and whatnot. It’s pretty grueling, but you come out of it and say, Boy, we really got the full exam, so if we passed that, we must be in pretty good shape.
TS: Well, I’ve covered a lot of financings over my time, and I’ve never heard anyone ever say, that was easy.
TS: But it sounds like this is even more difficult than what had been before. This is kind of one of those weird TV interview questions, but if you could travel back a year and tell yourself then prior to the fundraising, make sure you take care of this or that, what would that be? What really kind of surprised you or caught you off guard?
RB: I think the depth of diligence. So I mean we were prepared for it, I guess, in the sense that we had been sort of scrutinized along the way. So it wasn’t that we weren’t able to offer the kind of answers they were looking for, but you almost can never have too many sort of experts, especially in the regulatory realm, who can – because that really gets into opinions, right? I mean the agency wants one thing, and you got to try to find people to support your strategy or help you devise a strategy. So reducing regulatory risk is 70% of the game these days. We know we have awesome clinical efficacy and we know we have a very rational safety profile, you know, risk-benefit. But getting through the agency and reducing the risk on that side is huge. So I guess if there’s one thing I’d tell myself is get yourself surrounded with even more regulatory advice and be ready for that.
TS: Great. Well, I’m glad you figured it out and you managed to secure the financing, and good luck with the clinical trials. Obviously this is an important space for medtech, so I wish you all the best.
RB: Thank you. I think you’re right no. It’s vitally important that somebody does a good, positive trial, and we think we’re very equipped to step up and show great benefit and prove that devices can offer extremely helpful therapy to patients and doctors in this space.
TS: Amen. All right, thanks for joining us, Rodney.
RB: Thank you, Tom.